Red Stripe brewery switching to LNG

Beer maker Desnoes & Geddes Limited, which trades as Red Stripe Jamaica, has struck a deal with New Fortress Energy for long-term supply of liquefied petroleum gas or LNG.

The deal was described as the first of its kind for a large company in Jamaica. But that's only if it meets the expected September 2017 timeline and beats the previously announced supply arrangement between New Fortress and bauxite company Jamalco, set for a 2018 timeline.

Red Stripe estimates that conversion to LNG to power its brewery operations will lead to savings of more than US$336,000 per year and help the brewery meet its sustainability goals, the company said in a statement Friday.

Red Stripe boss Ricardo Nuncio was not reached for comment as he and his managers were said to be in meetings.

As outlined by the brewery, the project is expected to reduce greenhouse gas emissions by approximately 6,000 tonnes per annum. LNG will power Red Stripe's combined heat and power plant, boosting output by over 50 per cent.

There will also be a conversion of Red Stripe's main steam boilers from heavy fuel oil to natural gas. The plant's steam output is expected to increase by 50 per cent, reducing fuel usage overall on-site.

"The sustainability and operational capabilities that are made possible by LNG make our partnership with New Fortress Energy a win for the environment and our business," said Nuncio in the statement.

"Red Stripe continues to focus on changing the way we operate throughout the entire supply chain so that we can deliver on our commitment to making a positive environmental impact," he said.

The company, which is owned by Heineken International, did not say how much the project would cost.

EXPECTED GROWTH IN VOLUME

Last month, the brewery announced it would be investing €12 million - about $1.7 billion in Jamaican currency - to develop a new packaging line and technology system to handle expected growth in volumes for the next decade. It made no reference then to the LNG conversion plan.

Red Stripe's beer line currently operates at full capacity, having resumed the manufacture of beer volumes meant for distribution in the United States market at the Kingston plant last year. Those volumes were previously contracted to a manufacturer in the US.

New Fortress Chairman Wes Edens described the LNG deal as an 'unprecedented partnership with an iconic Jamaican brand'.

The American energy company began its association with Jamaica two years ago through a partnership with Jamaica Public Service Company (JPS), under which it began supplying natural gas to the power utility last year. That partnership will expand once JPS's new plant under development in St Catherine comes on stream.

Since then, the company has been seeking out other clientele in Jamaica and the region.

"Our mission is to be a catalyst for economic growth and environmental gains, as Jamaica quickly develops into the premier clean-energy economy in the Caribbean. This partnership with a legendary company like Red Stripe puts us closer to this goal," said Edens.

New Fortress and D&G said the LNG project will be a multimillion-dollar investment and would be configured to allow for future expansion of the brewery, up to twice its current capacity.

New Fortress will supply all the necessary equipment, logistics and employee training. The company is managed by an affiliate of Fortress Investment Group, a diversified global investment manager with approximately US$70 billion of assets under management at March 2017.